Best Syndicate Manager - Crédit Agricole CIB
What does it take to excel as a covered bond syndicate manager in a period of market disruption?
Vincent Hoarau, head of financial institutions group (FIG) syndicate at Crédit Agricole CIB (CACIB) says three factors contributed to his team’s rise to the top of the rankings this year.
First, there is the way that the FIG desk — comprising Hoarau along with André Bonnal and George Kalbin —don’t limit themselves to one funding tool. It is present on the entire capital structure in addition to covered bonds, allowing issuers to discuss any topic related to funding with any member of the team.
“The fact we have only one entry point for FIG syndicate from A to Z, regardless of the nature of the issuance project, means we can build up a consistent and strong relationship with individuals,” says Hoarau. “We talk to issuers about everything from covered bonds down to additional tier one so we can look at all the possible funding tools and that really helps to differentiate ourselves to borrowers.”
To do so, teamwork is essential, both on the desk and with the wider FIG debt capital markets group, run by Christian Haller. “It really is one team, one dream,” says Hoarau.
His desk gets involved in projects well before a deal is about to materialise, working hand in hand with origination colleagues, and also with senior bankers. “It’s day-to-day involvement with DCM, not just ‘let’s plug syndicate into the discussion because we have a live deal’, and this is where we think CACIB makes a difference with respect to issuers.”
The team also takes pride in its commitment to get deals across the line even in tricky circumstances, such as unusual names or trades that are not eligible for the ECB’s purchase programme.
“We think that when a transaction is not straightforward, we are the bank that issuers want to pick,” says Hoarau. “People recognise that we have the commitment and engagement to make a deal happen.”
The versatility of the syndicate team delivers similar benefits for its investor coverage, and it is this dialogue that is the second key factor in CACIB’s win. Permanently open communication with investors about the market environment in relation to covered, senior and subordinated instruments are welcomed on the buy side.
“We are trying to deliver guidance to the investor base,” he says. “So whether the topic is regulation, FI supply dynamics, or the impact of the ECB covered bond purchase programme in the Covid context or most recently the impact the European Union’s issuance plans could have (or not) on covered bond pricing, investors appreciate our views.”
The syndicate team is also backed by a strong covered bond research offering led by Florian Eichert, and a leading sustainable banking team. The alignment with sales and trading is also total. “It’s obviously easier to differentiate when you can rely on very strong and recognised specialists, and we work with DCM to leverage best that market intelligence,” says Hoarau.
All these factors came together this year — no more so than in the early days of the Covid shock, when covered bond spreads widened amid what Hoarau calls a completely dislocated secondary market.
“You differentiate in these types of situations when there is a lot of price discovery involved and you need to ignore secondary market prices. Issuers appreciate strong views even if sometimes they are based on what is left, a strong intuition and conviction,” he says.
“We often managed to guide issuers towards much more competitive pricing — more competitive than the secondary market was suggesting, and convince people that it is primary sometimes that dictates secondary and not the other way around.”
This part of the syndicate role has often been decisive for funding teams looking into covered bonds or any other funding instruments, particularly after phases of significant spread widening and the absence of liquidity and relevant pricing in the secondary market.
Given the unprecedented market conditions, dialogue with borrowers has been intense in 2020. “Funding officers reward the quality of the market intelligence you can provide them with and, most importantly, your capacity to anticipate the impact of events.
I think we have consistently demonstrated accuracy in our market read and this is what has been recognised,” says Hoarau. GC